U.S. Offers Key Support to Canadian Pipeline

Opponents of the Keystone XL pipeline, which would move oil to the Gulf Coast, have protested at the White House for a week.Credit
J. Scott Applewhite/Associated Press

WASHINGTON — The State Department gave a crucial green light on Friday to a proposed 1,711-mile pipeline that would carry heavy oil from oil sands in Canada across the Great Plains to terminals in Oklahoma and the Gulf Coast.

The project, which would be the longest oil pipeline outside of Russia and China, has become a potent symbol in a growing fight that pits energy security against environmental risk, a struggle highlighted by last year’s oil spill in the Gulf of Mexico.

By concluding that the $7 billion Keystone XL pipeline would have minimal effect on the environment, President Obama would risk alienating environmental activists, who gave him important support in the 2008 election and were already upset by his recent decisions to expand domestic oil drilling and delay clean air rules. Pipeline opponents have protested in front of the White House for a week, resulting in nearly 400 arrests.

At the same time, rising concerns about the weak economy and high gas prices have made it difficult for the administration to oppose a project that would greatly expand the nation’s access to oil from a friendly neighbor and create tens of thousands of jobs.

The project still must clear several hurdles, including endorsement by other federal agencies, additional studies, public hearings and consultation with the states through which the pipeline will pass. But all signs point to the Obama administration approving the project by the end of the year, perhaps with modifications.

Environmental advocates say that the messy process of extracting and processing tarry oil from the Alberta wilderness would significantly increase greenhouse gas emissions and devastate bird habitats. And they warn that a leak in the 36-inch-diameter pipeline could wreak severe environmental damage.

The State Department said in its environmental impact statement Friday that the pipeline’s owner, TransCanada, had agreed to take steps required by the Transportation Department to reduce the risks of a spill.

The impact statement did not fully resolve concerns raised by other federal agencies, particularly the Environmental Protection Agency, which harshly criticized earlier drafts. An E.P.A. spokeswoman, Betsaida Alcantara, said that the agency would carefully review the latest statement to determine whether it adequately dealt with questions about the pipeline’s impacts on air quality, drinking water, endangered species and minority and Native American communities.

The pipeline is expected to open in 2013 unless delayed by lawsuits or other challenges.

For many in the environmental movement, the administration’s apparent acceptance of the pipeline was yet another disappointment, after recent decisions to tentatively approve drilling in the Arctic Ocean, open 20 million more acres of the Gulf of Mexico for oil leasing and delay several major air quality regulations. Environmentalists are still smarting from the administration’s failure to push climate change legislation through Congress.

Analysts and environmental advocates said these decisions had opened a wide and perhaps unbridgeable breach between the Democratic president and environmentally minded voters. It is far from certain, however, that these activists will withhold their support from Mr. Obama in November 2012, particularly if he is running against a Republican who denies the existence of climate change and is more supportive of the oil industry than he is.

Michael Brune, executive director of the Sierra Club, urged President Obama to veto the project, despite the State Department’s willingness to see it proceed.

“It will be increasingly difficult to mobilize the environmental base and to mobilize in particular young people to volunteer, to knock on thousands of doors, to put in 16-hour days, to donate money if they don’t think the president is showing the courage to stand up to big polluters,” he said.

Photo

Protesters like David Daniel of Texas gathered on Wednesday in Lincoln, Neb., to discuss the proposed 1,711-mile pipeline.Credit
Nati Harnik/Associated Press

Julian E. Zelizer, professor of history and public affairs at Princeton University, said that the 2012 election was shaping up to be close and the president could not afford to take these activists for granted. “I think a year ago President Obama felt he could do things that might alienate his base and organizations important to the Democratic Party and get away with it because in the end most Democrats wouldn’t go for a Republican,” Mr. Zelizer said. “Now he might pay a price for it.”

With the campaign heating up, the president appears reluctant to pursue environmental policies that could be characterized as suppressing job creation or keeping energy prices high.

The proposed Keystone XL pipeline extension would connect Canada’s oil sands to several vital refineries around Houston and the Gulf of Mexico that are designed to handle heavy crude. It would also link to a vast pipeline network that snakes out from the gulf to several large metropolitan areas in the East.

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Kerri-Ann Jones, assistant secretary of state for oceans and international environmental and scientific affairs, said in a telephone briefing that the environmental impact statement was not the last word on the project. The secretary of state must make a final determination that it is in the nation’s economic, political, energy security and environmental interest, she noted.

But the report does conclude, she said, that “there would be no significant impacts to most resources along the pipeline’s corridor” if the project’s operator follows all relevant laws. Some American Indian cultural resources and plant and wildlife habitats could be adversely affected, the report states, although it says those concerns will be addressed.

TransCanada has refused to change its application despite critics who have contended that the half-inch-thick wall of the pipeline is not sturdy enough for maximum flow pressures, a claim the company denies.

But the company agreed to 57 conditions set by the Department of Transportation last spring, including burying the pipeline four feet below the surface, committing to frequent aerial and ground monitoring and setting the maximum distance between shut-off valves at 20 miles.

“We believe we are building the safest pipeline in North America,” said Terry Cunha, a TransCanada spokesman.

The Canadian government has lobbied hard for the pipeline extension, joining forces with oil companies like Royal Dutch Shell and Exxon Mobil that have large investments in oil sands production. Under current plans, oil sands production could overwhelm existing pipeline capacity in less than five years.

Gary Doer, the Canadian ambassador to the United States, said building the pipeline would produce 20,000 construction jobs and 100,000 additional indirect jobs in services and supplies. “It’s good for the U.S. economy, U.S. jobs and U.S. energy security,” he said. “If you ask Americans, would you choose Canada over the Middle East, they’d say yes.”

Mr. Doer said the carbon emissions from oil sands production and refining had declined by roughly 40 percent a barrel since 1990, and further improvements were under way. “We have to continue working on the sustainability of development,” he said. “We believe in clean water and air, too.”

Canada, already the No. 1 source of imported oil to the United States, produced 1.5 million barrels a day of synthetic crude from oil sands in 2010 and hopes to expand that to 2.2 million barrels a day in 2015 and 3.7 million barrels a day by 2025. That level of expansion will require not only the Keystone project, but probably also pipelines to the west coast of Canada, where the crude could be exported to China and other Asian markets.

Keystone XL would increase Canada’s pipeline capacity by 700,000 barrels a day, roughly the amount of oil Malaysia produces. Oil sands alone already provide more imported oil to the United States than Saudi Arabia, Nigeria or Venezuela, countries that are potentially unstable or hostile.

Executives in the oil industry said they were satisfied that the administration recognized the importance of the pipeline project. “It’s more about jobs and energy self-sufficiency than anything else, but what’s wrong with that?” said Chip Johnson, chief executive of Carrizo Oil and Gas.

Clifford Krauss reported from Houston.

A version of this article appears in print on August 27, 2011, on Page B1 of the New York edition with the headline: State Dept. Backs Canadian Pipeline. Order Reprints|Today's Paper|Subscribe